SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18078 / April 9, 2003
Accounting and Auditing Enforcement Release No. 1756 / April 9, 2003
SECURITIES AND EXCHANGE COMMISSION v. PATRICK O. WHEELER, et al., Case No. 02-60131-CIV-GRAHAM (S.D. Fla.)
SEC OBTAINS FINAL JUDGMENT AGAINST PATRICK O. WHEELER
IN CYBERGUARD ACCOUNTING CASE
On April 4, 2003, the United States District Court for the Southern District of Florida entered a final judgment against Patrick O. Wheeler, who was the last remaining defendant in the Commission's accounting case against current and former executives of CyberGuard Corporation, a network security company based in Fort Lauderdale, Florida. Wheeler is CyberGuard's former chief financial officer and vice president of North American sales, and its current vice president of business development. Without admitting or denying the Commission's allegations, Wheeler consented to the entry of the final judgment, which permanently enjoins him from violating the books-and-records, internal controls, and misleading auditors provisions of Section 13(b)(5) of the Securities Exchange Act of 1934 and Rules 13b2-1 and 13b2-2 thereunder, and requires him to pay a $20,000 penalty.
The Commission's complaint, which was filed on January 30, 2002 and amended on November 15, 2002, charged Wheeler and two former CyberGuard executives with, among other things, engaging in improper revenue recognition practices that caused CyberGuard to materially overstate its reported revenues during the company's 1997 fiscal year and certain quarters of its 1998 fiscal year. Both of the other defendants previously settled with the Commission. In addition, CyberGuard and two other former officers of the company settled in a related administrative proceeding. For further information, see Litigation Rel. Nos. 17346 (Jan. 30, 2002) and 17561 (June 12, 2002), and Exchange Act Release No. 45362 (January 30, 2002).